Quản trị kinh doanh - Chapter 9: Designing strategies

Chapter 9Designing StrategiesExplain how businesses use planning to solve problems and make a differenceDistinguish how planning is different at the organizational, divisional, and functional levels of a businessOutline methods that managers use to understand their industries and competitorsLearning ObjectivesDescribe how managers assess the organization’s capacity to execute proposed business plansDemonstrate how managers develop divisional strategies and tactical plansCompare traditional strategic planning models to an event-based approachLearning Objectives (cont.)Designing and developing strategies is a continuous process that helps organizations determine what they do, why they should be in business, how they can win and sustain market share, and how they can continually innovate to keep ahead of the competitionAcquisition (p. 230)When an organization purchases another organization or business in order to growHow Managers Plan to Make a Difference (p. 228)StrategyPlan of action for achieving goalsThree levels of strategyOrganizational strategy – corporate level strategy that addresses the question “What business are we in?” and unites all parts of the organization Divisional strategy – strategy that determines how a business will compete in a particular industry or marketFunctional strategy – strategy that determines how employees will implement and achieve a tactical planDifferent Levels of Strategy (p. 230)Organizational, divisional, and functional strategies are documented using business, tactical, and operational plans, respectivelyBusiness plan – stated actions and goals that support the organizational strategy (p. 230)Tactical plan – stated actions and goals that support achieving the divisional strategyOperational plan – stated actions and goals that support achieving the functional strategyDifferent Levels of Strategy (cont.)Connecting “mission, vision, and values” to strategies and plansDifferent Levels of Strategy (cont.)Figure 9.1Organizational strategies designed to gain a competitive advantageCharacteristics of an organization’s products or services that distinguish it from competitors and provide an advantage in the marketReactor Company that does not follow a consistent strategy but just responds to changes in the environmentAnalyzerCompany whose strategies seek to maintain existing products and services while pursuing limited innovationOften imitate or follow the proven success of prospector organizationsOrganizational Strategies (p. 231)Defender (p. 231)Company whose strategies support stable growth and continual improvement of existing products and servicesStability strategy – organization focuses on processes, products, and services that will sustain it over the long term (p. 232)Cost leadership strategy – organization seeks competitive advantage by reducing production costs and therefore consumer prices Organizational Strategies (cont.)Prospector (p. 232)Company that uses strategies for high-risk, fast growth through product and market innovationFirst mover – company that gains competitive advantage by being the first to offer a new product or service, or to use a new cost-saving technologyOrganizational Strategies (cont.)Competitive analysisProcess of assessing and monitoring the competition in order to design more effective strategiesFive forces model (p. 233)Michael PorterAllows managers to assess the major threats that an organization can expect to encounterEnables continued reinvention and shaping of the business to reflect market changesIndustry and Competitive Analysis (p. 232) Five forces model:Industry and Competitive Analysis (cont.)Figure 9.2Five forces model (cont.)Power of suppliers – ability to increase pricesPower of buyers (customers) – ability to decrease prices charged by company for its products or services (p. 234)Substitute products and services – importance of uniqueness of company’s products or servicesRivalry – increase in competitors that offer the same products or services (p. 236)Industry and Competitive Analysis (cont.)Five forces model (cont.)New entrants – new competitors that enter the market (p. 234)Barriers to entry – obstacle that makes it difficult for an organization to enter a particular market or replicate a competitor’s service or product offeringsSupply-side economies of scale (p. 235)Demand-side benefits of scaleCustomer switching costsCapital requirementsIncumbent advantages independent of sizeUnequal access to distribution channels (p. 236)Restrictive government policyIndustry and Competitive Analysis (cont.)Five forces model (cont.)New entrants (cont.)Expected retaliation (p. 236)Financial resources of incumbent, loyalty of customer base, and control over distribution channelsIncumbent’s ability to reduce pricesIndustry growth rateIndustry and Competitive Analysis (cont.)ResourcesAssets, people, processes, and capabilities of an organizationMarket positionHonest assessment about how the company competes in its industryCapacityFinancial and human resources available to the company which will enable or hinder it to achieve its goalsOrganizational Position and Capacity (p. 237)Company positionBoston Consulting Group Matrix – framework for evaluating business units according to growth and market share (p. 237)Largely based on the proportion of the market controlled by the organizationGrowth strategy – strategy for increasing revenue, profits, market share, or territories (p. 238)High growth markets – total business is expandingOrganizational Position and Capacity (p. 237)BCG Matrix:Organizational Position and Capacity (cont.)Figure 8.3BCG Matrix (cont.)Business’s position in the matrix determines a strategic recommendation (p. 237)Dogs (low market share/low market growth)Cash cows (high market share/low market growth)Stars (high market share/high market growth; p. 238)Question marks (low market share/high market growthSWOT analysisMethod of assessing an organization’s strengths, weaknesses, opportunities, and threatsOrganizational Position and Capacity (cont.)Capabilities and resources (p. 240)Core capabilities (competencies) – activities and processes that an organization routinely does well in comparison to its competitorsResources – assets, people, and processes of an organizationOrganizational Position and Capacity (cont.)Focus strategy (p. 246)Organization concentrates on a specific target marketMay employ cost leadership and/or differentiation strategiesDifferentiation strategyOrganization seeks competitive advantage by providing goods or services that are significantly different from the competitionStrategies for Performance (p. 245)Vertical integration (p. 247)Diversification method in which an organization adopts:Backward integration - begins producing its own suppliesForm of diversification strategy in which an organization adds new kinds of goods, services, or business unitsForward integration – takes on the distribution and selling of its productsRenewal strategyAddresses declining performance through retrenchment and re-growthStrategies for Performance (cont.)